You may be paid weekly or monthly and your rate of pay constitutes your basic salary. It is the fixed amount of money you earn each week or each month BEFORE adding any extras such as bonus or commission (or deductions).
Most salaries are offered on an annual basis and will show in your contract of employment as a £x pa (pa stands for per annum, which is Latin for per year).
- If you are paid a daily rate (Y) and work 5 days per week, your annual basic salary will be [Y x 5 x 12]. Example: £180 per day x 5 days x 12 months = £10,800 pa
If you are paid monthly, your monthly basic pay will be your annual salary divided by 12 equal payments.
- £10,800 pa / 12 = £900 per month
Basic rate of pay and basic salary are shown as gross figures. This means that it is the sum BEFORE tax and national insurance contributions are taken out. Your tax rate will depend on several factors and will be confirmed to you in writing each year by HMRC. You may also find it on a P60 or a P45 and it is usually a code that looks like this one: 1245L.
National insurance contributions are also determined by your circumstances and by HMRC. Your employer must comply with your tax code and NI rate and cannot change them.
You can find more information about tax and NI here. but your payroll team can also help answer questions about what you see (or not) on your payslip.
Cost of Living Review Definition
COL reviews stand for Cost Of Living reviews; they are salary reviews that take place usually once a year. More often than not, it will be effective from 1st April but it is not always the case in all companies.
Pay reviews are not guaranteed and there is no legal obligation on your employer to increase salaries every year (as long as you are not paid below the national minimum wage). The amount or percentage by which a salary may be increased is at the discretion of the directors and may be based on cost of living as well as individual performance.
Do you feel you or your team need additional HR training? At OneHR, we provide one-off or ongoing purposeful training sessions, which equips employees with skills they can immediately use in real life HR scenarios. Want to know more? Contact us at: kaye@one-hr.co.uk.
